Approving deals in the hundreds of millions (USD terms) is normal for financial institutions. I fell in love, again, with financial institutions.
- Financial institutions division is highly transactional driven. The max transactional approval I have requested for a single overdraft is $1.5bn. This is freaking huge! That request was obviously rejected. My boss and usual credit approver were both on leave and I had to course it through another senior credit officer. I was close with him, but despite having the relationship, he didn't approve the transaction.
- He cautioned with the following conditional approval:
I can only approve up to $750MM and the disbursement of the remaining money will be staggard following the receipt of incoming funds.
- It was half the transaction amount; it was the amount he was comfortable with. Looking back, as a risk manager, I would have done the same as his decision. To break down the exposure into smaller parts, that are easier to manage by the global banking system to digest.
Thus, I continue to fall in love with Financial Institutions and the beauty of the transactions.
Green and sustainable financing and deepening Taiwan’s debt capital markets
- Assisted in the structuring of cross currency swaps hedging solution by swapping a renewable energy’s NTD income with a life insurance’s USD investment income. The deal eventually didn’t push through due to lack of expertise by life insurance companies in assessing credit of renewable and green energy.
- A quasi-government bank received consent order from New York Department of Financial Services requiring it to establish effective compliance and AML controls and to retain independent monitor for two years. As part of the order, it was required to pay the fine of $180MM, equivalent to the branch's 10 years net income. However, at the same time, it was the appointed by Taiwan government as the real-time gross settlement (RTGS) central clearing counterparty for domestic US dollar flows. As credit officer, together with the Senior Risk Manager, we had to limit and right-size the facilities extended to the major quasi-government bank– reducing the placement line’s tenor from to 7 days and even overnight, as well as, diversifying the placement lines across several Taiwanese banks with strong credit rating to digest the excess USD liquidity, and have a board meeting locally to increase the intra-company placement lines, temporarily.
- Formosa bonds are foreign currency denominated debt issuance in the domestic market. These normally have tenors of 25 to 30 years and now up to 40-50 years. The issuance requires a local bank agent with non-resident account being opened. This meant that KYC had to be completed prior to the pricing and underwriting of the bond. To streamline the process, had created standard onboarding process that details the time required, documentation requirements and template/standard email communications. One of the Japanese Banks and the Japan Investment Banking team were surprised with the Taiwan Corporate Banking team’s efficiency, professionalism, and leadership. The KYC was completed ahead of time, and the deal went smoothly.
Clients in danger: Helping a friend in need is a friend indeed
- An offshore bank’s Taiwan securities broker encountered a fat finger event in which it oversold shares of Formosa Petrochemical. The Taiwan team had alerted of the Paris banking team and London risk managers – the key stakeholders and responsible teams for extending lines of credit to French banking group. The formal request was equivalent to the oversold amount + potential interest of short-term loan with tenor of 7 days. This was approved overnight by the parent relationship team, had passed local credit approval with loan documents execution and operations drawdown in 24 hours! Loan was repaid with no credit default. A truly remarkable experience for a banker helping a fellow financial institution get out of the rabbit hole.
- Swedbank lacked the economies of scale that major US and other European commercial and investment banks have had in Taiwan . Taiwanese banks were about to lose access to Swedish Krona and sought this global bank for help. I was the Senior banker for one of the major banks impacted by the exit. I had to prepare Correspondent Banking documentations for new onboarding and new currencies with the Global seniors that included AML, Trade Risk and Business Executives. Just when it was cracking down on dormant accounts, to justify the opening of new accounts and attain the minimum revenue threshold, we had to cross-sell other products, including GBP and CHF accounts, as well as have verbal commitment from the bank to increase their USD payment flows. The account opening went smoothly and was highly appreciated by the client bank’s senior management, international banking, and finance teams.
Fighting financial crimes through Counter Terrorist Financing (CFT) and Anti-Money Laundering (AML)
- Ensured that we had recourse and confirmation of intraday funding from another financial institution’s correspondent banking prior to releasing the intraday overdraft with a Taiwanese Bank. This delayed the drawdown of Bangladesh Central Bank’s US$100MM by hackers that tried to defraud, funnel and layer the payment internationally through the Taiwanese bank, the franchise and the global banking system. I was the credit officer in charge for that transaction and the client with Taiwan franchise. The funds were recovered.
- Elevated Taiwan’s CFT/AML program through constant education and re-education of Taiwanese banks. We saw a sudden increase in trade between Asia Pacific and the Middle East. At first look, these were normal trade transactions with purchase order, receipts and/or bill of lading, as the supporting documentation. However, there were a few issues.
- They fitted the typologies of structuring/smurfing (i.e. high volume transactions of amounts below the threshold for AML reporting across numerous newly opened and registered trading companies). We had identified suspicious flows by Chinese and Hong Kong registered companies that had accounts opened with Taiwan Overseas Banking Units (OBUs). As a Global Correspondent for the USD, we took the initiative to bring its AML and Compliance seniors to Taiwan and have formal conferences in both English and Mandarin with the Board Members, Senior Executives of Taiwanese banks. The case was formally reported to The Financial Crimes Enforcement Network (“FinCen”) after concluding that these flows were money laundering activities. As the lead banker for several of these difficult discussions, we were not only able to avert serious financial reprimand and regulatory fines but was also able to help the entire Taiwan banking industry achieve the gold standard for AML. In 2019, Taiwan passed the Asia Pacific Group on Money Laundering with the best rating “Regular follow-up.”
Going Global Beyond China and Taiwan: Taiwanese financial institutions are faced with overbanking, stiff competition and tough regulatory barriers by both Taiwan and Mainland China.
- For banks with China presence, I acted as the lead negotiator of the legal contracts such as NAFMII, ISDA and CSA of large commercial banks. Similarly, for banks with smaller and weaker presence in China, less-than-full support documents –such as letter of support (hard language) and letter of comfort (soft language)– were required for all credit exposure extension including derivatives, followed by a support verification call with senior risk manager, senior banker and the bank’s CEO or treasurer.
- With tightened regulations on China exposure, as the Financial Supervisory Commission increased the credit provisioning charge to 1.5% of total loans extended to Mainland China, as well as, limiting the total exposure (incl. JVs and subsidiaries) to the size of its domestic net worth, we took many of the financial firms to ASEAN and South Asia.
- We were funding a Taiwanese securities broker’s Singapore subsidiary with FX aggregator, commodities, and futures trading in Singapore. However, CHF depreciated sharply and its FX aggregator business with hedge funds and FX Prime Brokerage clients was seriously impacted. Globally, the alternative credit program for funds’ under real-time netting and margining were cancelled and exited, as they were operationally impossible. This seriously impacted the relationship with the client with its net open position dropping from $1bn to under $100mm. Managed to keep the NOP at $300mm, following the receipt of the parent’s Board Approved letter of support.
- Funded a Securities firm’s Thailand’s short term loan request, backed by Guarantee from parent. To improve the liquidity ratio, its treasurer requested for a change in guarantor from to its immediate holding company subsidiary. In view of the risk amount and revenue being generated from the group, we took comfort in having verbal support from treasurer, as well as, confirming its importance to the group as an investment and funding vehicle, despite being a holding company. Further, we took the legal opinion of the Bermuda law expert in that 1) the guarantor’s constitutional documents allow it to provide guaranty and 2) Bermuda recognizes New York Law and Courts as one of the allowed jurisdictions for trial.
- Facilitated and funded Securities’ southbound international equities orders on Singaporean Exchange. We extended funding support based on the guaranty provided by local Stock Exchange. We were the sole clearing bank. As Singapore didn’t reciprocate the northbound flows, the business model was not sustainable, and the local Stock Exchange liquidated the subsidiary and stopped the southbound flow.
- One of the largest private banks in Taiwan had a strong commitment to expand overseas. As the relationship associate, I took the initiative of killing several bottlenecks and menial jobs within the company's different franchises. The integration of its cross asset platform and one-stop shop solution required us to integrate the broker dealer and banking systems across markets. Compounded by the regulatory hurdles on these highly restricted markets, the level of difficulty in executing such novel solution is extremely high!
- In Indonesia, we successfully executed the auto-settlement of its USD and IDR cash flows, that included client notification and confirmation with embedded regulatory cross-checking by 1) local custody and 2) treasury operation teams. The latter were impressive solutions that served as compliance assurance. While these operation teams may be under the same Indonesia franchise, they are mutually exclusive and are independent of each other. The seamless auto-settlement required partnership with Regional and Taiwan custody teams, as well as client’s full trust on with our capabilities to make them trade derivatives and FX, and more importantly, an exotic product, Domestic Non-Deliverable Forwards.
Back to basics: asset servicing and custody services
- Pitched the franchise's global custodian capabilities across several domestic financial institutions; won several mandates and had been serving their day-to-day operations across from corporate access, trust account and fund accounting, income and dividend declarations, US tax advisement and support on W-forms. Given significant increase in assets by life insurance companies, we were able to capture discretionary mandates early-on through the credit analysis and research provided. The direction also helped capture global custodian business with asset managers and mutual funds.
